What Makes Innovation Partnerships Succeed
Increasingly, companies today are aggressively pursuing breakthrough innovations. But to succeed in a significant, cost-efficient, and timely way they need to partner with other companies who have their own special interests and concerns, which turns out to be very hard. Partnerships are especially important in the tech sector, which moves fast with innovation as its fuel. In this article, the authors report on the efforts that Meta has made in establishing successful innovation partnerships with other companies, and they share guidance for leaders who wish to do the same.
Breakthrough innovation introduces novel paradigms and platforms, and it creates new product families and economic opportunities. But it’s never a solo act. Even the largest companies need partners.
Innovation partnerships offer many advantages. They offset R&D costs, add expertise and flexibility, and help create new markets. They can also accelerate innovation and commercialization timelines — a vitally important function, given that achieving and commercializing breakthroughs can otherwise take decades. That’s why 94% of tech industry executives consider innovation partnerships a necessary strategy.
The problem is, the majority of these collaborations fail, especially when it comes to actually making breakthroughs.
Why? There are all sorts of reasons. Companies choose partners who aren’t a good fit. They set misguided goals. They fail to communicate effectively or fail to deliver per product requirements. They resist sharing vital confidential information for fear of leaking IP. They are change-resistant or can’t navigate unanticipated circumstances. The fact is, innovation is complex and risky, and collaboration can make it riskier.
That’s certainly true for the companies that are working to create the AR/VR/metaverse experience. To achieve their goals, these companies need to make critical breakthroughs in optics, hardware, and material technologies — breakthroughs that without collaborative innovation could well take decades. The stakes are high, and to succeed these companies are going to have to get their collaborations right.
Recognizing that the metaverse can only be built through partnerships, Meta Platforms — where two of us (Andy and Taha) work, and for whom one of us (Paola) has consulted — not long ago reached out to over a dozen technology companies and proposed new kinds of collaborative relationships. These companies were not new to partnerships with Meta, but for reasons that included feasibility, financial risk, and IP allocation, most of them were declining to partner for new technology breakthroughs. Based on AR/VR applications alone, they felt the technical and business risks did not justify the investment. For example, a leading material supplier for a critical AR/VR component could not justify investing in development of new materials based on AR/VR consumer volumes. Reshaping the collaboration terms and model allowed the partner to access the broader market outside of Meta’s applications, justifying their investment.
To develop these relationships, which were designed to encourage rapid breakthrough innovations, Meta and the companies involved have had to devise new ways of fostering trust and openness, managing risk, and communicating opportunity. More specifically, they’ve have had to 1) establish complex rules for assigning ownership of IP and the right to commercialize or benefit from the results of their collaborations, 2) devise fair and effective dispute resolution systems, and 3) figure out how to allocate risk and financial burden.
